GST - DECODED MAY 2020

LETS EXPLORE GST TOGETHER

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Contents

Important Due dates ............................................................................................................................. 2

Cross Charge – Supply Between One Location To Another .............................................................. 3

GST on Water Supply : As part of other Maintenance Services ....................................................... 5

How Punctuality Helps Us To Grow Ladder Of Success ................................................................... 8

Latest Notifications/Circulars ........................................................................................................... 13

Contact us: ........................................................................................................................................... 14

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Important Due dates

Tax Particlars Due DateIncome Tax TDS Payment 7th May 2020GST GSTR 3B -March 2020 Turnover >5Cr 5th May 2020PF/ESI March-20 and April-20, LWF Payment for April-2020 15th May 2020Professional Tax Payment and Return Filing- April-2020 31st May 2020

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Cross Charge – Supply Between One Location To Another

To understand the concept lets us take the definition of “Supply”

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business;

(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

(2) Notwithstanding anything contained in sub-section (1),––

(a) activities or transactions specified in Schedule III; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

By virtue of Schedule I of CGST Act 2017, following activity to be treated as supply even if made without consideration.

Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business.

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Distinct person means persons have multiple GST registration with the same PAN. For example company have multiple GST registration across India.

Valuation of these services

As per the section 15 of CGST Act, value of supply, in case of distinct person, shall be determined as per Rule 28 of CGST Rules which prescribes the methods to determine the value.

Rule 28 of CGST Rules reads as under- The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall-

a) be the open market value of such supply;

b) if the open market value is not available, be the value of supply of goods or services of like kind and quality;

c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order.

Rule 30 provides for value as 110% of the cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services.

Rule 31 provides value shall be determined using reasonable means consistent with the principles and the general provisions of section 15 and the provisions of this Chapter. Provided that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be open market value of the goods or services.

Distribution of common input tax credit can be done through cross charging of invoices between distinct persons rather than opting to take ISD registration and its regular compliances.

Distribution can be done on the basis of some rationale lile in proportion of sales turnover, Identification of proportion of expense in some logical manner and apportionment thereof.

As this is very challenging to identify and value the cross-charge invoices between distinct persons so we suggest mitigating the litigation in this behalf as below:

1. Identify the common expenses bills and ask vendors to raise separately to the respective locations as maximum as possible.

2. Check the rates if these services were made available through third parties. Let’s ask for few quote.

3. Prepare a policy of apportionment and periodicity of Invoices. 4. Not to utilize the Common credit till its apportionment or cross charge.

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GST on Water Supply: As part of other Maintenance Services

In the latest judgement by the authority of advance ruling by the Rajasthan filed by M/s Latest Developers Advisory Ltd dated 07.02.2020. ( AAR No. RAJ/AAR/2019-20/32)

Facts of the case

The Applicant is in the Business of maintenance services to the housing societies with two separate contracts .

Contract 1 for the purpose of providing common area maintenance services and levies the GST on the same.

Contract 2 for Water supply with the Individual house owner.

The applicant procures from the water tanker suppliers and supplies it to individual owners as per their respective requirements. Applicant is charging the water charges as per square feet rate.

Advance ruling is asked to ascertain whether GST is applicable on Water charges?

In light of the given facts, it important to examine the definition of ‘Goods’ under the Central Goods and Services Tax Act, 2017 (‘CGST Act’), which is as under: ‘Goods’ – Section 2(52). (52). “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;’

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The Government Issues Notification with regard to exemption of goods as below:

Notification No.2/2017 – Central Tax Rate dated 28th June, 2017 refer Entry No 99

SI. No.

Chapter, Section, Heading, Group or Service Code (Tariff)

Description of Goods Rate (per cent.) Condition

(1) (2) (3) (4) (5)

99 Heading 2201 Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized and water sold in sealed container]

Nil Nil

The water supplied by the Applicant is tanker water and is not covered in any of the above-mentioned exclusions form the exemption such as aerated, mineral water, purified water etc.

AAR observed as below in the above case:

That the applicant is providing services to the society (RWA) in two parts viz. all services of maintenance (other than supply of water) and supply of water. We further observe that as a general practice across trade and market, the maintenance services is inclusive of supply of water and hence supply of water provided by the applicant through a separate agreement raises a suspicion in its activity. The reason behind the suspicion is that the water received by the society (RWA) is used for multiple purpose

It is observed that the applicant seems to have bi-furcated the services provided to society (RWA) in order to escape the condition of Rs. 7500 per month per member or it might be crossing the GST registration threshold limit of Rs.20 lakh.

In general each society consists of many residential towers, varying floors from three to fifteen plus and further each tower consists of many residential apartments which have a common underground and overhead water storage tank. Even though the applicant might have a separate agreement for supply of water and for receiving charges on the basis of per square feet with the residents of the apartment in a particular tower but it is not possible to supply water to each apartment separately as mentioned in the Contract-II, because the apartments do not have their own separate water storage tanks.

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Therefore, in other words supply of water is actually to the Society (RWA) and the applicant is trying to split the Contract into Contract I and II to avoid the GST to facilitate Society (RWA) in order to keep the maintenance charges paid by the residents below Rs 7500/-.

In view of above it is quite evident that supply of water in Contract-II and supply of maintenance services in Contract-I are to the same society (RWA) and relevant to each other, hence there appears no case of direct supply of water by the applicant to the individual residents of the society (RWA).

RULING

Contract-I and Contract-II appears to be directly linked with each other as there is no case of direct supply of water by the applicant to the individual residents of the society therefore the applicant is required to pay GST as applicable on Contract-I.

In the Similar ruling by the AAR Karnataka in the case of Water Health India Private Limited, it was held the water supplied after removing all the suspended solids, organic matter, chlorine, obnoxious taste and smell from raw water. The raw water is converted into purified drinking water which is then supplied to the public.

The Authority for Advance Ruling held that the supply of purified water whether in sealed or unsealed container is not entitled for GST exemption and, hence, taxable under GST.

Applicability of Advance Ruling

Section 103(1) of the CGST Act, provides that- The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only—

(a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling;

(b) on the concerned officer or the jurisdictional officer in respect of the applicant

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How Punctuality Helps Us to Grow Ladder of Success

Punctuality is a habit where an individual does things on time. It is one of the secrets for success and one of the hallmarks of leaders being systematic maintaining everything in orderly manner and completing the task and being available on time. Punctuality is etiquette. It is all about doing things timely and being aware of the importance of time. It helps in managing one’s own time thereby respecting others’ as well.

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Being punctual is a sign of discipline. Defense personnel are trained to be disciplined and are punctual. They stick to punctuality whether it is rain or shine. Succinctly, it is an attitude to be on time at a destined place.

Advantages:

Punctuality helps in better time management; time discipline and it projects and presents your personality positively to others.

It indicates how much concern and respect you have towards others to whom you have given your appointment.

It is like valuing others and their time and sends right signals for others. You don’t have to cut a sorry figure for being late when you are punctual.

If you know how to manage your time properly then you will learn how to be punctual. When people maintain punctuality, work can be executed smoothly and successfully.

If people don’t stick to deadlines, they tend to procrastinate culminating into delays and stress.

If you are punctual you can avoid stress and anxiety and gain respect among others.

If you waste one minute of your time you are wasting one minute of your life. In a nutshell, punctuality saves your precious time as well as others. You command respect among all. You will have peace of mind as things roll out as per the schedule. Finally, you can be in the good books of all.

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WHAT CAUSES US TO BE PUNCTUAL AT WORK

Excessive work may result into postponement thereby delaying other activities. Lack of seriousness on the part of individuals and taking things lightly may result into

procrastination. When people don’t maintain diary, they don’t remember the program schedule. In few

cases, people forget their commitments and appointments as they are preoccupied with other activities.

Improper planning of work may lead to accumulation of the tasks resulting into further delays. Finally, when people are not smart at time management skills, it may lead to unpunctuality.

Effects:

The repercussions of unpunctuality are many such as building up tension resulting into stress and fatigue. It brings disrespect to the individuals and they lose their name, fame and dignity. They will be branded or proclaimed as late comers. It is very difficult for these people to climb the ladder of success at the workplace. If you delay by 15 minutes and the people waiting for you, for instance, are 10 then you wasted 150 minutes of their precious time. Is it proper to make others’ time unproductive?

TIPS TO BE PUNCTUAL

Develop a positive mind set to be punctual. Initially, it requires lot of practice to be punctual. Set your mental clock as it guides you properly on time. Learn to respect your time as well as others’ time.

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Maintain a diary of your appointments to avoid disappointments. Plan and organize your life properly and stay focused. Praise the people who are punctual as it encourages others to be punctual. Keep slogans everywhere such as ‘Thanks for being punctual’ as it generates

awareness and corrects those who don’t fall in line.

BENEFITS:

Integrity

Getting to meetings on time shows that you are trustworthy. Punctuality portrays you as a person that can be believed. When you say "I'll be there in five minutes", people know and are assured that you'll be there in five minutes. Shows Respect for the Other Party

Being punctual shows that you respect the other party's time and you are not willing to waste it. They could have hundreds of other tasks they have to get to.

Dependability and Reliability

Tasks can be handed to you at work and your boss is sure you'll take care of them. This will only happen if you have a great history of punctuality.

Eliminates Anxiety and improves Self-Confidence

Being on time eliminates stress from your life and removes the anxiety of being late. When you arrive on time, you are calm and organized. There are no forgotten items. You'll remember to comb your hair and pack important documents.

Improves Others' Perception of you

Other professionals will begin to see you as a professional and serious individual. They will see how much work you put into being punctual and will be more likely to trust you with tasks and businesses You Set A Good Example for Others

If you're a leader in your organization, being punctual to work and meetings encourages your followers to also be punctual. They wouldn't want to be the last person to show up.

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In all, being punctual is a skill that must be mastered. Traffic and a coffee spill aren't good enough excuses to be late to anything. Punctuality opens door that may otherwise be permanently closed.

The habit of punctuality should be developed from the childhood itself from parents and teachers. Become a role model and worthy personality to be taken seriously by others. Sometimes, a few people deliberately delay themselves to have their absence felt. It is not a good sign. Punctuality brings lot of difference in your life. Be punctual always in your life irrespective of your domain, area or sector. It pays to be punctual in this competitive world. Punctuality is the key to your success.

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Latest Notifications/Circulars

Notification No. 37/2020-Central Tax ,dt. 28-04-2020

Seeks to give effect to the provisions of rule 87 (13) and FORM GST PMT-09 of the CGST Rules, 2017. orm PMT-09 which enables a registered person to transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger to the head IGST, CGST, SGST or UTGST or cess has been made effective from April 21, 2020

Notification No. 38/2020- Central Tax ,dt. 05-05-2020

Seeks to make fifth amendment (2020) to CGST Rules.

Notification No. 39/2020- Central Tax ,dt. 05-05-2020

Seeks to make amendments to special procedure for corporate debtors undergoing the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016

Notification No. 40/2020- Central Tax ,dt. 05-05-2020

Seeks to extend the validity of e-way bills till 31.05.2020 for those e-way bills which expire during the period from 20.03.2020 to 15.04.2020 and generated till 24.03.2020.

Notification No. 41/2020- Central Tax ,dt. 05-05-2020

Seeks to extend the due date for furnishing of FORM GSTR 9/9C for FY 2018-19 till 30th September 2020.

Notification No. 42/2020- Central Tax ,dt. 05-05-2020

Seeks to extend the due date for furnishing FORM GSTR-3B, Jan-March 2020 returns for the taxpayers registered in Ladakh.

Circulars/Orders

Circular No 138/08/2020 dated 06.05.2020

Seeks to clarify 'issues in respect of challenges faced by the registered persons in implementation of provisions of GST Laws'

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For further updates:

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